Assuming you are the present CFO and/or part of the Administrative team for Newp

Question

Assuming you are the present CFO and/or part of the Administrative team for Newport Hospital, what changes would you suggest in order addressing the hospital's developing problem with liquidity in comparison with its benchmarks? How well is Newport Hospital actually functioning? How do you address the aging plant facilities, its possible need to replace properties, equipment, and its ability to continue to pay current debt? What would you suggest to increase profitability and to ensure a continued credit rating that will allow the receipt of future financing assistance and debt service?

Explanation / Answer

(1)

liquidity is one of the most important aspect of running a business,if a company is having high profits but it's liquidity is very then it has a higher chances of going bankrupt.if liquidity of the newport hospital is lower than of the benchmark standards, it is a reason for concern. liquidity issues arises because of either delay in collection period or making early payments to creditors or suppliers. management should look into improving it's collections from customers or insurance companies and should develop better credit relations with suppliers and if necessary should look into raising working capital through either bank or financial markets.

(2)

currently newport hospital is making operational losses but it is coming nearer it's break even point.

(3)

if equipments are not properly maintained their potential life shortens, so if those equipments are obsolete then they should be replaced, and company is in postilion to pay it's current debt however it would be not good to raise new debt.

(4)

company is generating good revenue but is baring losses because of high expenses so copmany should focus on cost cutting wherever its possible but should not compormise on quality or brand of the hospital. And to ensure the credit rating it has right now company should not raise new debt.

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